News Corp.'s Culture of Corruption Claims James Murdoch

More than eight months after News Corp.'s long-simmering phone-hacking scandal erupted in Britain last July, and eight months after Rupert Murdoch and his top lieutenants insisted the law-breaking inside his London tabloids had been limited to a rogue element, the scandal yet again this week has accelerated with surprising force.

Two days after Scotland Yard revealed that Murdoch's tabloid The Sun had engaged in a sweeping pattern of illegal activity, and one week after it was alleged that News Corp. had implemented a policy of deleting sensitive emails regarding hacking at News of the World, today Murdoch's son James resigned as chairman of News International, a coveted post that oversees Murdoch's U.K. newspaper empire.

Prior to the hacking humiliation, the 39-year-old Murdoch was seen as the likely heir to his father's global media throne. In making the announcement today, News Corp. made no mention of the hacking investigation, instead noting that Murdoch had resigned his position as part of a previously announced relocation from London to News Corp.'s world headquarters in New York. But it's impossible to view the resignation outside of the scandal that continues to eat away at the Murdoch family reputation.

The pressing problem the Murdochs now face is that the blockbuster story has truly morphed into a hacking and bribery scandal, and James Murdoch is implicated in both.

What's telling is that when Rupert Murdoch's legal troubles mounted last year, he specifically devised a defense that he thought would help inoculate James, according to a recent report in BusinessWeek. That strategy, and the larger News Corp. cover-up, has failed.

James Murdoch becomes the third News International executive to be tarnished by the still-growing scandal in Britain. Last summer, Rebekah Brooks resigned from her top News International post after being arrested as part of Scotland Yard's hacking investigation. (Brooks had previously edited News of the World.)

From 1995 to 2007, News International was run by longtime Rupert Murdoch confidant, Les Hinton. Hinton left London to run Dow Jones, the publisher of the Wall Street Journal after Murdoch purchased it in 2007. Last summer though, Hinton was forced to resign his postgiven his central role in News Corp.'s earlier attempt to hide from Parliament the extent of hacking at Murdoch's tabloid.

For years, News Corp. executives, including James, steadfastly claimed not only had the phone hacking been limited, but that senior executives had no idea it was taking place, in part because subordinates had misled them. The containment strategy worked until the morning of July 4, 2011, when the Guardian published its exclusive about how an investigator working for Murdoch's tabloid had hacked into the mobile phone voice mails of a British schoolgirl who had gone missing, and who was later found dead.

Summoned before Parliament, James and Rupert Murdoch stuck to their script of apologizing for wrongdoing, but insisting they had known nothing about it. But James was quickly confronted by News Corp.'s former in-house counsel, as well as a News of the World editor, who insisted Murdoch had been made aware of the hacking activity years earlier.

Then last December, it was revealed James Murdoch had been included in a 2008 email chain, which he responded to, that detailed the "nightmare scenario" that was brewing inside News of the World regarding widespread hacking activities. (Murdoch conceded he responded to the email but insisted he hadn't read the full chain of messages.)

In another blow to Mr. Murdoch, related this time to The News of the World, a lawyer for the Leveson Inquiry said Rebekah Brooks, a former Murdoch executive, was apparently informed by the police in 2006 that detectives had evidence that the cellphones of dozens of celebrities, politicians and sports figures had been illegally hacked by an investigator working for the newspaper.

And now come The Sun bribery allegations and the suspicion that key executives, including James Murdoch, must have known about the wholesale payments.

Neither is Mr Murdoch alone in the dock. The protestations of ignorance from NI executives - from Rebekah Brooks, Andy Coulson and James Murdoch, to name but three - were suspect with regard to phone hacking; with regard to corrupt payments, they are laughable. It is simply not credible that a company was handing out tens of thousands of pounds without the management being aware of it, or knowing what the money was for.

The Guardian's July scoop detonated the current hacking controversy and forced Murdoch and his executives to defend the company's behavior on a much wider scale. And as the curtain was pulled back beyond the tabloids, News Corp. at times began to resemble a criminal enterprise, with officials admitting their employees have not only paid off news sources, but hacked into phones, computers and emails.

Rupert Murdoch has consistently fostered a culture of corruption and cover-up at News Corp. His son James is just the latest insider to the pay the price.